BLOG — Nov 18, 2024
Getting ready for NSRF: Malaysia’s ISSB- aligned enhanced sustainability disclosures
By Cheryl Tay and Jun Hui Ho
The National Sustainability Reporting Framework (NSRF) addresses Malaysia’s adoption of ISSB Standards in a phased approach
On 24 September 2024, the Securities Commission Malaysia (SC) announced that listed issuers on Bursa Malaysia’s Main and ACE Markets, as well as large non-listed companies (NLCos) with annual revenue of RM2 billion and above will have to comply with the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB) in a phased approach.
The NSRF attempts to follow closely the ISSB Standards (specifically the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures) to address stakeholder needs for consistent, comparable, and reliable disclosures. The phased timeline takes into account the varying levels and maturity in sustainability reporting practices of Malaysian corporates.1
Phased Approach 2, 3
The NSRF will be implemented in stages, starting with annual reporting periods beginning on or after 1 January 2025.
Full adoption of IFRS S1 and S2, reasonable assurance on Scope 1 and 2 emissions, and disclosure requirements on Scope 3 emissions will come in effect from annual reporting periods beginning on or after 1 January 2027 for Group 1 entities.
- Group 1 - Large-listed issuers on Bursa Malaysia Main Market with market capitalization of RM2 billion and above will begin adopting the IFRS S1 and S2 Standards in 2025
- Group 2 – Remaining Bursa Main Market listed issuers will adopt the IFRS S1 and S2 Standards in 2026
- Group 3 – ACE Market listed issuers as well as large NLCos with annual revenue of RM2 billion will adopt the IFRS S1 and S2 in 2027
(e.g. 2025 refers to annual reports that cover period from 1 January to 31 December 2025).
Source: National Sustainability Reporting Framework Infographic
Reliefs and Exemptions2, 3
Transition reliefs on the reporting scope of the IFRS S1 and S2 such as:
- Permissible to disclose information on only climate-related risks and opportunities (in accordance with IFRS S2)
- Permissible to focus on climate-related disclosures specifically on principal business segments
- Permissible to not disclose Scope 3 emissions, except for categories already required by respective regulators (specifically, Bursa Main Market listed issuers are required to disclose Scope 3 emissions for business travels and employee commute)
Exemptions are available for:
- Large NLCos whose holding company already reports to ISSB-aligned standards or equivalent standards (such as European Sustainability Reporting Standards – ESRS) may leverage on the holding company’s disclosures
- Large NLCos whose holding company reports using other international standards and frameworks may be given exemption from reporting for 3 reporting periods, subject to the policy decision of the Registrar
PACE Tools and Guidance
PACE (Policy, Assumptions, Calculators and Education) is an initiative designed by the NSRF to support companies by providing tools, educational resource, and capacity programs.4
Find out more here: PACE - National Sustainability Reporting Framework | Securities Commission Malaysia
S&P Global Market Intelligence Solutions to support you wherever you are in your reporting journey
The ISSB Foundation Pack is a customizable four-module solution, designed to ensure your disclosures align with these new standards. Drawing on years of TCFD-aligned analytical reporting services and project management, our team is well equipped to enhance your sustainability reporting capabilities.
Starting with an ISSB Disclosure Benchmark & Gap Analysis, we identify the extent to which the company’s public reporting is aligned with ISSB (IFRS S2) recommendations. We review publicly available climate disclosures in Sustainability Reports, the company’s latest CDP Climate Change Questionnaire and up to three of their peers. From this analysis, we provide an overview of the disclosure coverage and quality, which will determine the overall alignment of each company against the ISSB framework.
The Climate Risk Analytics module includes a detailed Transition Risk Assessment on Policy and Market Risks through the lens of carbon pricing based on three future carbon price scenarios. This is followed by a Physical Risk assessment under two climate scenarios—Shared Socio-Economic Pathways 5 and 2 (SSP5 and SSP2)—for eight climate hazards (Water Stress, Temperature Extremes, Coastal Flooding, Drought, Wildfire, Tropical Cyclone, Fluvial and Pluvial flooding). The output is a Climate Risk Assessment Report, which captures forward-looking carbon pricing risk and physical risk impact metrics.
Carbon Footprint Analytics helps the company to measure their Scope 1, 2 and 3 emissions using a quantitative approach aligned with the GHG Protocol. Full assurance support can also be provided when external verification is required.
Finally, the Science-Based Target Setting module supports the company in identifying the appropriate target-setting approach and emissions reduction trajectories aligning with different temperature scenarios to set science-based emissions reduction targets.
Find out more here: ISSB Reporting | S&P Global (spglobal.com)
Ready to start your ISSB reporting journey?
Sources & Citations
1 Securities Commission Malaysia. (2024, September 24). National sustainability reporting framework to enhance sustainability disclosures. Retrieved from: National Sustainability Reporting Framework to Enhance Sustainability Disclosures - Media Releases | Securities Commission Malaysia
2 Securities Commission Malaysia. (2024, September 24). National sustainability reporting framework: Infographic. Retrieved from: https://www.sc.com.my/api/documentms/download.ashx?id=20efbd8f-b5a0-4122-994f-edbccd53c2b2
3 Securities Commission Malaysia. (2024, September 24). National sustainability reporting framework for Malaysia: Guidance document [PDF]. Retrieved from: https://www.sc.com.my/api/documentms/download.ashx?id=e98c3900-7b35-4cf5-a07d-fd17acf8734e
4 Securities Commission Malaysia. (2024, September 24). PACE: National sustainability reporting framework for Malaysia. Retrieved from: https://www.sc.com.my/nsrf/pace